5 Job Market Myths
by James Paulsen, Wells Capital Management
Conditions in the job market have always dominated impressions of the overall economy. This is true not only for investors, but also for policy officials. Indeed, in the contemporary recovery, decision making at the Federal Reserve seems almost solely tethered to the unemployment rate.
Like other economic indicators, most labor market measures have lacked vigor in this recovery. Due to the severity of the 2008 collapse, the unemployment rate began the recovery near a post-war high and has declined only slowly. Similarly, both job creation and labor force participation have proved sluggish and inconsistent. Finally, wage gains have remained very modest.
Recently, the characterization of the labor market has been heavily influenced by several “myths” which have been promulgated, repeated, and accepted as indisputable truths. We shed light on five such illusions which hopefully provides a more accurate assessment of the current U.S. job market.
Myth #1 — The unemployment rate is only declining because frustrated job seekers are leaving the labor force!
Myth #2 — Real wages have fallen for years!
Myth #3 — New job creation is mainly low paying positions!
Myth #4 — Most new jobs are only part-time positions!
Myth #5 — No need to worry over wage inflation!
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